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WRAPUP 6-Trump threatens more China tariffs, Beijing ready to hit back

From Reuters - April 6, 2018

BEIJING/WASHINGTON (Reuters) - China warned on Friday it was fully prepared to respond with a fierce counter strike of fresh trade measures if the United States follows through on President Donald Trumps threat to slap tariffs on an additional $100 billion of Chinese goods.

Trump, in light of what he called Chinas unfair retaliation against earlier U.S. trade actions, had upped the ante on Thursday by ordering U.S. officials to identify extra tariffs, escalating a tit-for-tat confrontation with potentially damaging consequences for the worlds two biggest economies.

Chinas Commerce Ministry spokesman, Gao Feng, called the U.S. action extremely mistaken and unjustified, adding that the spat was a struggle between unilateralism and multilateralism. He also said no negotiations were likely in the current circumstances.

The result of this behavior is to smash your own foot with a stone, Gao told a news briefing in Beijing. If the United States announces an additional $100 billion list of tariffs, China has already fully prepared, and will not hesitate to immediately make, a fierce counter strike.

While U.S. officials said they were prepared to talk the issues through with China, there was no clear path to communication. Both Treasury Secretary Steve Mnuchin and Trump economic advisor Larry Kudlow were on television to promote the idea of talks, with Mnuchin telling CNBC we are in communication regularly.

Gao was speaking shortly after Trump defended his proposed tariffs on U.S. radio, saying the move might cause a little pain but the United States will be better off in the long run.

Asked in an interview with New York station WABC about the effect on U.S. stock markets, Trump said the market has gone up (since he took office) so we might lose a little bit of it.

So we may take a hit and you know what, ultimately were going to be much stronger for it.

Financial markets have been roiled by the prospect of threats becoming action and U.S. stocks tumbled on Friday as investors worried about an escalating trade war.

Kudlow told Bloomberg Television Trump and Americas top trade official Robert Lighthizer were thinking about submitting a list of suggestions to the Chinese.

On Wednesday, China unveiled a list of 106 U.S. goods including soybeans, whiskey, frozen beef and aircraft targeted for tariffs, just hours after the Trump administration proposed duties on some 1,300 Chinese industrial, technology, transport and medical products.

Washington called for those $50 billion in extra duties after it said an investigation had determined that Chinese government policies are designed to transfer U.S. intellectual property to Chinese companies and allow them to seize leadership in key high-technology industries of the future.

China said it was not afraid of a trade war, even though it did not seek one, and accused the United States of provoking the conflict. Gao said comments from U.S. officials about ongoing talks about trade issues were incorrect.

Under these conditions, the two sides cannot conduct any negotiations on this issue, Gao said, without elaborating.

CHINAS ROLE

DAMAGING CONSEQUENCES

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